FASB shakes up construction accounting rules

The FASB has announced revisions to its standards concerning contract assets and liabilities specifically for construction contractors, following recommendations from its Private Company Council (PCC). The new guidelines allow private companies to present contract assets and liabilities on a gross basis in their financial statements. This change is limited to private construction firms, which must disclose their choice to use this presentation alternative. Additionally, FASB is working on a proposed accounting standards update, which will undergo a 45-day comment period. FASB chair Richard Jones noted that similar changes might be explored for public companies, although some board members expressed skepticism about the necessity. The updates aim to simplify the accounting process for private entities, particularly regarding credit loss allowances.